Hardide reports healthy pipeline of exciting opportunities in both current and new markets

Hardide plc (LON:HDD), the developer and provider of advanced surface coating technology, has announced its preliminary results for the year ended 30 September 2021.

Highlights

Financial

·   Revenue of £3.6m (FY20: £4.8m)
·   Gross profit of £1.3m (FY20: £2.3m)
·   Gross margin of 36% (FY20: 49%), lower due to the fixed production cost element within cost of sales. Variable margin was 72% (FY20: 73%)
·   EBITDA loss of £1.5m before exceptional items (FY20: £0.5m loss)
·   Fundraising of approximately £0.8m together with a CBILS loan of £0.25m in February 2021 to increase cash reserves. Second CBILS loan of £0.25m received in April 2021
·   Cash at bank at 30 September 2021 of £1.5m (FY20: £2.7m)

Trading

·   The value of orders received during H2 FY21 of £2.5m was 52% higher than in H1 FY21 as demand from customers recovers. Compared with FY20:
    ·    46% increase in sales to the aerospace sector, from a low base·    38% increase in sales to the precision engineering sector, including power generation customers·    46% reduction in sales to the oil & gas sector
    ·    12% reduction in sales to the flow control sector

 Strategic

·   Full approval of the new Bicester site for coating flying components received from Airbus. First production order received for Airbus A320 aircraft wing components. We are still waiting for Airbus and their Tier 1 supplier to agree final arrangements before a supply agreement between Hardide and the Tier 1 can be signed
·   First large production order received for the coating of gas turbine blades for a major European turbine manufacturer
·   Leonardo Helicopters successfully completed testing of a new transmission system design that includes Hardide-coated components. Production orders are now expected to begin in FY22
·   A testing and development programme is underway with a large US-based manufacturer of electric vehicles (EVs)
·   Development of the ESG agenda, including the metrics on which to base our energy usage and CO2 emissions

Technology

·   Equivalent registration of the most recently-secured UK patent is underway in 10 leading industrial countries. The patent covers further-enhancement of the Hardide coating and new applications, including turbine blades and vanes
·   Fundamental research continues into the development of new coating variants with additional properties conveying significant new and beneficial advantages

Post-Period

·   Former Bicester site fully vacated just before lease termination on 26 October 2021.  Environmental benefits will result from the relocation, as well as saving approximately £100k in dual site running costs
·   Stronger trading in the first quarter of the new financial year gives the Board confidence in the Group’s prospects for FY22

Commenting on the results, Robert Goddard, Chairman of Hardide, said: “Demand is now resurgent across all our sectors and we have a healthy pipeline of exciting opportunities in both current and new markets. Many test programmes that were on hold or slowed by the pandemic are once again gathering pace.

“Opportunities for the Hardide coating have never been more relevant as the world looks to industry to initiate and support measures to limit climate change, waste and pollution. Use of the Hardide coating increases the life and performance of metal parts in high-wear and high-value applications, thereby reducing waste, energy consumption and end-of-life pollution. Our coatings provide solutions to problems that previously would have required a hazardous and environmentally damaging coating process that is now restricted under EU, UK and US health, safety and environmental regulations.

“Looking forward, the much improved sales performance in the first months of the current financial year and the considerable pipeline of opportunities augur well for further growth in sales. This provides us with confidence in the Group’s prospects for 2022 and onwards.”

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